Offering its first audited financial report in decades, the city Department of Recreation and Parks says expenditures outpaced revenues by $6.8 million in fiscal year 2012.

The report – to be released this morning to the Board of Estimates – says the deficit was due to capital outlays that will be paid off in future years “by proceeds of bond issuances, grants and other revenue sources.”

Excluding capital costs, the department says it ran a surplus of exactly $200,000 for the year, the result of the closure of youth recreation centers deemed underutilized or obsolete by the Mayor’s Task Force Report on Recreation Centers.

Originally, $10.1 million was budgeted to operate 55 rec centers, but “painful efforts” to close or privatize 24 centers, coupled with the “strategic reallocation of existing staff,” resulted in actual expenditures of only $8.8 million.

Long Time Coming

The report, a copy of which was obtained by The Brew, provides relatively few details of the actual workings of the agency, which has been under longstanding criticism for not having a firm grip on its finances.

Today’s report was first requested two years ago by Councilman Carl Stokes, chairman of the Taxation, Finance and Economic Development Committee.

Following lengthy negotiations between the City Comptroller’s Office and the Finance Department, the audit got underway in January 2013. City auditor Robert L. McCarty at first estimated the report would be finished last summer, then by the end of 2013.

Difficulties in reconciling cash balances recorded by the agency’s fiscal office and the Finance Department, which collects and disburses funds to all agencies, were reportedly at the root of the delays.

$32,900 for Junior Cotillion

In a cover letter, McCarty reported to the Board of Estimates that audit tests indicated that the figures contained in the balance sheet and statements of revenues and expenditures were “free of material misstatement.”

But McCarty said he could not vouch for “the effectiveness of the Department of Recreation and Parks’ internal control over financial reporting. Accordingly, we express no such opinion.”

Perhaps the most interesting revelation in the 12-page report is the agency’s “off-budget” funding by the Baltimore City Foundation, a non-profit corporation established by the city to disburse funds from foundations and individuals.

In 2012, the foundation “contributed” $597,500 to Rec and Park programs that were not included in its budget – and was not incorporated into today’s financial balance sheets.

In a supplemental note, Rec and Parks says that the foundation helped pay for a raft of activities, including $700 for park concerts, $4,900 for playground supplies, $12,100 for the “Believe Greener Baltimore” program and $32,900 for the Junior Cotillion.

The vast bulk of the funds, however, apparently went to administrative functions. Without any further explanation, the agency lists the following uses of foundation money: “program contractual services” ($201,500), “program dues and fees” ($106,400), “program travel” ($73,300) and “other R&P activities” ($143,200).

The Baltimore City Foundation was set up in 1981 by Mayor William Donald Schaefer to leverage philanthropic grants from foundations and individuals for the benefit of the city.

The corporation is controlled by the Mayor, who appoints the majority of the directors on the board. City agencies have accounts with the foundation for the disbursement of funds.